China posts record high trade surplus, imports rising; swells their reserves; ditto Taiwan; aircargo volumes rise; NSW/Vic lose AAA ratings; Brexit deal on knife-edge; UST 10y at 0.97%; oil and gold firm; NZ$1 = 70.5 USc; TWI-5 = 72.6

Here's our summary of key economic events overnight that affect New Zealand, with news that trade seems to be rising, and driven by an expanding Chinese economy.

China has posted an enormous trade surplus in November. It hit a record +US$75.4 bln, compared with a US$58.4 bln in October and analysts has expected a +US$53.5 bln surplus. Their exports were up an impressive +21% in November compared with the same month a year ago, and their imports were up +4.5%. The politically sensitive surplus with the US was up to +US$37.3 bln and representing half the overall result. China ran a -US$412 mln deficit with New Zealand in the month. And with Australia, their's was a -US$3.8 bln deficit with imports from Australia falling -4.9%.

China’s foreign exchange reserves rose by more than +US$50 bln in November to the highest since August 2016, boosted by the weaker greenback and a trade surplus at record highs. They now stand at +US$3.2 tln or about 20% of China's GDP. Their gold assets fell to US$110 bln or only 3% of their total reserves.

Taiwan's trade surplus didn't grow like China's, but the country also posted a very good year-on-year rise in exports (+12%), and this was almost matched by an equal rise in imports (+10%).

Aircargo volumes are rising as well. In fact cargoes into North America are now higher than for the same November month a year ago. Domestic aircargo there is up even more strongly. And while they are still well behind year-ago levels, aircargo volumes in the Asia Pacific region are on the upswing. In fact, the same is even true in Europe. Unfortunately, this is an expensive recovery because the subsidising passenger travel levels are still dormant and aircargoes have to pay their full way.

In Australia, the RBA seems to have concluded that the BuyNow, PayLater schemes of enforcing a no-surcharge rule on their merchants works to "promote innovation", and that these benefits outweigh the harm the sector does to some users. But they do note that at some point, no-surcharge rules will need to be unwound.

And S&P has downgraded the credit ratings for the states of NSW and Victoria, dropping them both from AAA status to AA+. That aligns them with both Western Australia and Queensland, and ahead of South Australia's AA rating. Perhaps these downgrades signal that Australia could be about to lose its AAA rating?

In Europe, the final Brexit talks are underway and there is not an air of optimism surrounding them, even as the UK has backed down on its threat to rip up some key prior agreements. It is the eleventh hour and still no substantial blinking by either side.

To start the week, Wall Street has opened lower, down -0.2% in mid-day trade. Overnight European markets closed slightly lower again. They both followed Asian declines. Yesterday, Tokyo closed down -0.8%, Hong Kong closed down -1.2% and Shanghai was also down -0.8%. However, the ASX200 ended up +0.6% and the NZX50 Capital Index ended up +0.2% at their respective closes.

The latest global compilation of COVID-19 data is here. The global tally is 67,250,000 and a +476,000 rise in one day. It is still very grim in Russia, the UK, Brazil, Turkey and Indonesia. It does seem to be easing further in Europe generally. Global deaths reported now exceed 1,540,000 and up a very sobering +7000 in a day as death rates spike everywhere.

But the largest number of reported cases globally are still in the US, which rose +181,000 overnight to 15,193,000. The US remains the global epicenter of the virus. The number of active cases is surging and now at 6,030,000 and that level is up +97,000 in just one day, so many more new cases more than recoveries. The rise in 'active cases' by about +100,000 in one day is being normalised. Hospitalisations are becoming a very major concern, as are reinfection rates. Their death total now exceeds 289,000. The US now has a COVID death rate of 871/mln, similar to Argentina.

In Australia, they are not getting any resurgence. There have now been 27,972 COVID-19 cases reported, and that is just +7 more cases yesterday. Now 42 of their cases are 'active' (-2). Reported deaths are unchanged at 908.

The UST 10yr yield will start today softer at 0.93% and a -4 bps reversal. Their 2-10 rate curve is marginally flatter at +79 bps, their 1-5 curve is also flatter at +29 bps, and their 3m-10 year curve is also flatter too at +86 bps. The Australian Govt 10 year yield will start today down -2 bps at 1.04%. The China Govt 10 year yield is unchanged at 3.32%, while the New Zealand Govt 10 year yield is up +5 bps at 0.96%.

The price of gold is up solidly today, gaining +US$27 to US$1865/oz or +1.5%.

Oil prices are unchanged at US$46/bbl in the US, while the international price is still just on US$49/bbl.

And the Kiwi dollar has firmed marginally to 70.6 USc and off its recent highs but at a similar level to a week ago. Against the Australian dollar we have weakened slightly, back to 94.8 AUc. Against the euro we are unchanged at 58.2 euro cents. That means our TWI-5 is still at 72.6.

The bitcoin price has changed little since this time yesterday, now at US$19,232 but that is another +0.6% gain in a day. The bitcoin rate is charted in the exchange rate set below.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».